A quick preview on the Reserve Bank of Australia SoMP via HSBC:
- new forecasts on 9 November
- Relative to the last set of forecasts (in early August), growth has been stronger than expected, while inflation was low, but much as expected. GDP growth was 3.4% y-o-y in the second quarter, versus the RBA's 3.0%.The unemployment rate fell to 5.0% in September, versus the RBA's 5.5% (the RBA's last set of forecasts had the unemployment rate falling to 5.0% by Q4 2020). At the same time, the trimmed mean was 1.8% y-o-y in Q3 - the RBA was forecasting underlying inflation at 1.75% by Q4 2018.
- We doubt that the RBA will revise up its growth forecasts, and expect them to be the same as the last set - with 3.25% growth expected in 2018 and 2019, slowing to 3.0% by 2020. However, given the better than expected labour market numbers, we expect the RBA to lower its unemployment rate forecast track. In principle, this should see them nudge the underlying inflation forecasts a little higher, with further support likely from a lower AUD assumption and higher oil price assumption. The August numbers showed underlying inflation rising to 2.25% by mid-2020 - we expect they may pull this forward to Q4 2019. A key question will be whether the RBA is confident enough to lift its underlying inflation forecast to 2.5% (the mid-point of the target band) by the end of the forecast horizon (the August numbers were for 2.25%).
- We expect the RBA to once again state that they see the next move for the cash rate as up. We expect the global risks to once again be highlighted, with a likely sense that the global outlook has become increasingly uncertain.
--
The release is due at 0030 GMT
- Friday November 9
- The SoMP is a quarterly occurrence
